Survey Finds CRE Development Is Flourishing In Florida

An annual survey from the NAIOP has once again ranked Florida in the top five states for all commercial real estate development.

Only Texas, New York, California and Tennessee ranked ahead of Florida in the survey conducted by an affiliate of NAIOP.

But fifth is nothing to sneeze at, especially when looking at the numbers from the “Economic Impacts of Commercial Real Estate” report. According to the report, commercial real estate projects across the Sunshine State pumped nearly $20 billion into the state’s economy a year ago. That $20 billion supported over 161,000 jobs that generated just shy of $6.8 billion in personal earnings.

The report factored in “all expenditures associated with each phase of the development process,” which included: architecture and engineering services; legal services; marketing and management services; grading, paving and landscaping services; site engineering services; and interior design and construction services.

The Sunshine State was ranked second in retail development, third in warehouse development, 12th in office development and 26th in industrial development.

South Florida has seen some massive commercial real estate purchases in recent weeks. Back in mid-July, Alex Rodriguez’s investment company acquired a 12,700-square-foot office condo in Coconut Grove to relocate all Miami-based business there.

“The thought of having the entire A-Rod Corp. Miami-based family under one roof has long been a desire of mine,” said Rodriguez, the former MLB superstar, said following the purchase. “Not only is it very positive for economies of scale, complementing our other office locations around the country, but it will facilitate the synergistic, creative environment we look to foster.”

Over in Palm Beach Gardens, New York Life Insurance Co. purchased the 188,950-square-foot, 10-story Financial Center at the Gardens for $71.8 million from California-based KBS.

“Palm Beach Gardens has proven to be a developing market with positive real estate dynamics which has made it easy to keep the building nearly 100 percent leased,” said Allen Aldridge, SVP for KBS and asset manager of the property.

The property, located on PGA Boulevard, is a short walk away from the Gardens Mall and has access to I-95 and the Florida Turnpike.

While commercial real estate is booming, Florida’s housing market has seen a decline in foreign investment. The number of sales to international buyers has dipped to 36,000 compared to the 50,000 in 2018 and 60,000 in 2017.

“A confluence of many factors – slower economic growth abroad, tighter capital controls in China, a stronger U.S. dollar and a low inventory of homes for sale – contributed to the pullback of foreign buyers,” said Lawrence Yun, chief economist for the National Association of Realtors.

Fortunately, Florida is still attracting the most foreign buyers than any other state across the country, holding a market share of 20 percent.

The Sunshine State was also ranked one of the top markets to flip properties, with fixer-uppers making as much as an 83 percent return on investment.